MARCH 2014

SOM graduate offers insider perspective on Yankee finances

By Steve Seepersaud

When Scott Krug '96 mentioned the figure of $189 million to a crowd of more than 100
Binghamton University alumni, it was evident from the chatter in the room that the
group had been paying attention to ESPN or New York-area newspapers.

A total player payroll beneath that much-reported figure would have enabled the New
York Yankees to realize some cost savings according to a set of regulations that Krug
said has become more contentious than the age-old money battles between players and
owners.

Krug, who serves as the Yankees' chief financial officer and vice president of financial
operations, discussed the issues affecting the team's bottom line at the School of
Management's alumni networking event held March 20 at the New York Athletic Club in
Manhattan.

Among the owners of Major League Baseball, the Yankees are an easy target for vitriol
— a successful team playing in the nation's largest media market with a seemingly
unlimited supply of money. In an effort to level the playing field, the league instituted
revenue sharing to take from the rich (larger market teams) and give to the poor (smaller
market franchises).

"It actually turned out to be high-revenue teams versus low-revenue teams," Krug said.
"Look at Washington, Toronto, Houston and Atlanta. Those are big markets but the teams
have lower revenues. Those teams have been historically on the receiving end of revenue
sharing. That's not what was intended."

The Yankees' revenue sharing payouts have increased exponentially since its implementation
nearly 20 years ago. Krug implied the team paid roughly $135 million in 2009, which
stands in stark contrast to the $24 million that all the big-market teams paid collectively
in 1996.

Under baseball's collective bargaining agreement, teams in the 15 largest markets
are now ineligible to benefit from revenue sharing. Krug said that's important because
money can be returned to the payors instead of going into the coffers of teams that
had previously been receiving funds.

"So, as the largest payor, we can get the most money back," he said. "The catch is
that we have to stay under the $189 million."

Although the Bronx Bombers opted not to grant a big contract to veteran second baseman
Robinson Cano (he signed a 10-year, $240 million deal in Seattle), they still crossed
the luxury tax threshold and will have a payroll closer to $200 million. The Yankees
could have qualified for more favorable luxury tax rates had they stayed south of
$189 million.

"I told Hal Steinbrenner [Yankees managing general partner], 'I'd like you to go under.
But, if you're not going to get under, then feel free to spend as much as you want.
Whatever you do, just don't go over by only a dollar, because that doesn't help.'
Unfortunately, that was the advice that he took," Krug said, drawing laughter from
the crowd.

Dean Upinder Dhillon thanked alumni for their continued engagement with the school
and their creation of opportunities for current students.

"Our seniors have seen a significant increase in the amount of jobs available to them,"
Dhillon said. "That's possible because of you. Of course, through your networking
you create opportunities for yourselves as well. We want to provide you with more
events like this. We're trying to expand our strategic reach into this area."

Gary Kibel '90, MBA '92, a School of Management graduate, provided welcoming remarks
on behalf of the Alumni Association.

"I strongly encourage you to stay connected to the University," said Kibel, who is
a member of the Association's board. "As you're out in the world, and you meet other
people who went to Binghamton, encourage them to stay connected too."

Would you like to share your expertise and experiences with fellow alumni? We invite you to be engaged with the University as a volunteer. Learn more on our website and get involved today.

B-CONNECTED with other graduates! B-connected is a secure virtual community only for Binghamton
University alumni. Update your personal profile, search for alumni, and submit and
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NEW SEASON, NEW JOB? To help you move ahead in your career, the Alumni Association offers two LinkedIn
groups. Make new connections in our Professional Network group and search for jobs posted by alumni in our Job Forum group (and share postings if you have them).

SHARE YOUR EXPERTISE WITH US! The Alumni Relations office is asked to recommend alumni who are expert speakers.
If you are well-versed, because of your education and professional experience, in
subjects including national security, politics, technology, career networking, environmental
studies or etiquette, please contact Melinda Holicky, associate director for volunteer engagement. Include your name, class year, and
a brief description of your experience and expertise. Supporting material could include
a c.v. or link to your website.

The Alumni Association and Uncommon Goods (founded by David Bolotsky '85) offer the
opportunity to purchase banks made from mailboxes salvaged from Newing Dining Hall. This can be a great keepsake of your time as a student at Binghamton. Banks also
make great gifts! Purchase a bank today.